WWE Third Quarter Earnings Call – Summary and Call Notes

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WWE’s 2020 third-quarter revenue finished at $221.6 million which is up 19% from 2019 in the same quarter, which was considered an upward trend and positive news for the promotion. Vince and Stephanie McMahon were on the call along with WWE’s newest hires in Nick Khan and Kristina Salen.

The company noted the increase in financials due in large part to the FOX / USA / Saudi Arabia deals was offset by the loss of both ticket and live merchandise sales, all due to the pandemic. On a positive note, their e-commerce (WWE SHOP) numbers grew to $9.1 million year-over-year.

Operating income was up to $63.4 million, which is an increase of 9 times year-over-year, thanks to the content rights fees increase and a significant decrease in event-related production expenses. The company also noted that it paid out $5.5 million in severance pay due to pandemic related layoffs. On another positive note, the average paid WWE Network subscriptions were up 6% year-over-year to 1.6 million.

The third quarter saw the creation of the ThunderDome structure, which will add “an incremental $22 – $27 million investment” which includes “increased personnel expenses as employees return from furlough” by the end of December as per Kristina Salen.

WWE noted having $638 million in cash and short-term investments which are “substantial capital resources to manage challenges that may lie ahead and deliver on key strategic initiatives.”

Notes from the call below:

  • Vince McMahon opened the call by saying how confident he was in this group of executives referencing Nick Khan and Kristina Salen and saying there is an optimism and “new spirit, new vibrance” with the group.
  • WWE president Nick Khan announced a few television projects with Total Bellas and a biography series on A&E along with a multi-part Vince McMahon documentary that has been sold to Netflix with WWE and Bill Simmons, who produced the HBO Andre The Giant documentary as the executive producer. Khan noted the financial investment will make the series one of Netflix’s most expensive on the documentary side. No release date was noted as the documentary has yet to be produced.
  • Khan said they are still exploring options for WWE Network to reach a wider audience which means that there is interest from potential clients and WWE is currently talking to partners, both domestic and global about licensing the network.
  • McMahon answered a question about ratings, saying they aren’t the only thing they look at. McMahon stated they have far more fans than they have ever had. McMahon states “WWE ratings are what they are, but you just can’t hang a hat on ratings being down,”. McMahon goes on to state that while their TV programming is a mothership, they are being seen on other platforms all the time. He said they are doing everything they can and that viewers have been coming back, pointing to the ThunderDome, better writing, and better execution for the return in viewers.
  • Nick Khan talked about how strong WWE programming did head-to-head against the Stanley Cup Finals and an NBA playoff game featuring the Los Angeles Lakers and LeBron James. He went on to discuss how linear TV has lost eyeballs, but that media consumption has not and is confident that WWE’s rights fees will continue to go up, which is interesting considering a recent article from Variety stating otherwise.
  • The company is still negotiating the long-discussed Middle East TV deal with no timeline for completion more in part having to do with the current circumstances of the pandemic. McMahon did say however that a deal will get done.
  • The company is partnering with Sony India on a 2021 event that will develop Indian stars. While It will air here in the states, the company did not state on which platform the event would air. 
  • Nick Khan discussed how WWE is prepared for the future and paying attention to what the FAANGs (Facebook, Apple, Amazon, Netflix, Google) are doing with live TV stating he felt that some recent hires from these companies suggest they are going deeper with live television. 
  • On where the ThunderDome could be moving to, CFO Kristina Salen said their assumption is they will be in “some kind of center for the foreseeable future” into 2021 with “lots of places for them to go.” Salen did not confirm when the Amway deal is up or when they would be leaving.

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